Hedge funds pool assets and diversify their portfolios with the aim of constantly making money, regardless of whether the general investment market is going up or down. Stocks play a significant role in hedge funds, and the largest funds are required to report long-held investments to the SEC each year. This can offer some insight for the casual investor.
If you have always wondered where the largest investment institutions place their trust, then this list of the top five hedge fund invested stocks should be of great interest.
1: Facebook Inc. (NASDAQ: FB)
Facebook is one of the most valuable companies in the world today. The largest hedge funds are heavily invested in Facebook stock. More than 40% of hedge funds have long-term holdings in the company.
2: Alphabet Inc. (NASDAQ: GOOG)
35% of the largest hedge funds have stock in Alphabet Inc. (Google’s parent company). Stock is responsible for up to 1.7% of the total assets held by hedge funds.
3: Microsoft Corp (NASDAQ: MSFT)
Microsoft isn’t always the highest performing tech stock, but it’s still a solid growth stock that can provide excellent long-term returns. Hedge funds obviously see the value in this stock, with 29% of the largest funds invested in the company.
4: Amazon Inc. (NASDAQ: AMZN)
Amazon has been a popular stock with private investors, so it’s not much of a surprise to see it also listed as a popular stock for hedge funds. 25% of the largest funds have investments in Amazon. Stock in this company has been some of the highest performing of the last year, with 64.79% growth over 12 months, and stock price hitting a new peak in 2018.
5: Time Warner Inc. (NYSE: TWX)
Time Warner Inc. is an interesting find on the list of the most popular hedge fund stocks. Stock value has performed poorly in the last 12 months, with an almost 5% decline in value. However, long-term growth shows significant gains since 2008, which would make the stock profitable for hedge funds that have been invested for a number of years.
Should You Buy the Same Stock as Hedge Fund Managers?
If you plan to invest for the long term, then the top four stocks on this list are sound investments, at least as far as the market stands today. Time Warner is more of a liability at this stage, with the company on hiatus due to an AT&T merger deal being blocked by the Department of Justice.
The safest portfolio is one that is well diversified, so even if you do decide to invest in any of these stocks, it should only be a decision based within the context of all of your investments and your available capital.
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